Having bad credit is a situation that has a negative impact on your financial health. It's why there are thousands of credit repair services that exist. These places aim to help people improve their credit standing, and that's an exciting proposition for many people dealing with bad credit. But what exactly do these places do? And can what they do really work?
What Credit Repair Services Do
Credit repair services are companies that say they can "fix" your credit for a fee. But what does that entail? Here is a run down of the services they typically offer. They'll:
- Identify and dispute items on your credit reports that are false, unverifiable, inaccurate or made in error. These include complete inaccuracies, negative items being reported past the legal time limit, items that are being reported more than once, and more.
- Use their relationships with the three national credit bureaus to try to remove negative items from your reports.
- Collaborate with the bureaus to make sure all records are accurate and up to date.
- Provide credit counseling and personalized solutions to improve your credit after they evaluate your situation.
- Monitor your credit and provide updates on changes so you know exactly what's going on.
So, these places can make a difference, especially if your credit reports contain errors. A 2012 Federal Trade Commission (FTC) study found that one in five consumers have an error on at least one of their credit reports, so it's very possible that yours might, too.
However, there are two glaring problems surrounding these credit repair services. These issues are the reasons why you'll read plenty of skepticism if you research these types of companies online.
The first is that there are scams and untrustworthy companies out there posing as legitimate services. These unscrupulous places have been known to steal identities or get consumers to commit credit fraud. So, watch out for companies who loudly boast of promises that seem too good to be true.
If a company is legitimate, they will be upfront with what they can and cannot do for your situation. They will also be lawful, which, among other things, means they will provide a written contract with specifics and can't accept payment until they fulfill the terms of the contract.
The second issue is that you are able to perform all of the services credit repair companies provide on your own. So, while these services can be effective, the issue is that you can be just as effective at credit repair. Plus, going solo will be cheaper than having to pay any fees and it won't be that difficult.
Should You Use a Credit Repair Service?
The world of credit can be confusing, but it's not rocket science. Most experts agree that there is no need to pay a company to tackle issues with your credit because you can do it yourself.
Many people are drawn to these places because they believe they can quickly and easily "fix" their credit. That won't be the case. Simply put, there is no magic solution that can instantly improve your credit. Any reputable and ethical credit repair service should tell you the same.
You can take charge when it comes to improving your credit. It's simply a matter of:
- Getting current on all accounts.
- Disputing errors or inaccuracies on your credit reports.
- Paying all of your bills on time, every time.
- Keeping credit card balances below 30% of their limit.
Those are the main things you can do, but not everything. And, of course, you need to put time, effort and commitment into your credit repair efforts.
On the other hand, many people like the idea of having experts on their side. The best credit repair services that have been around for awhile know what they are doing. They know the rules surrounding credit reports and know how to best navigate them to get things done.
Many people find these companies can provide support, guidance and resources to truly help them out. Plus, many services offer a free consultation, so it could be worth looking into. If you are interested in a credit repair service, we know just the place to look.
The Bottom Line
It can cost more to live with your bad credit than it does to use the services of a good credit repair company. However, these companies cannot guarantee a credit improvement and can only provide services you can perform yourself.
Speaking of credit issues, if your credit is keeping you from being able to get approved for a car loan, Auto Credit Express is here to help. We can match you with a local dealership that is capable of handling unique credit situations. Get started by completing our free and easy car loan request today.